Analysts -- for now -- are willing to give the perrenial performer Apple, Inc. (AAPL) a pass for poorer than expected earnings. Apple traditionally has surpassed analyst targets for unit sales and its balance sheet. But in the recent quarter, while growing, it sold 3 million less iPhones and 2 million less iPads than expected (i.e. it grew slower than expected).

For the most part analysts blamed the miss on a ripple-effect triggered by a slow iPhone 4S release (and perhaps, by proxy, co-founder Steven P. Jobs' death). They nearly unanimously predict Apple will get back on track this quarter.

Goldman Sachs suggests lowered expectations may result in bigger blowouts for Apple:

As consensus estimates are now likely to hug guidance more closely, we expect next quarter’s expectations to remain realistic and perhaps even conservative.

Sterne Agee analyst Shaw Wu remarks:

We are not proud modeling 18.5 million iPhones which turned out higher than actual 17 million shipments but we were materially below consensus of 20 million, not to mention some analysts who assumed as high as 23 million units. It turned out that a concern we raised in our earnings preview (see our 10/12/11 note) that consensus didn't factor in enough of a "product transition" that management talked about was valid (which turned out to be iPhone 4S launching in October).

Likewise Morningstar predicts a big fourth quarter, commenting:

We continue to believe that the capabilities of the new phone, a large base of existing customers ready for renewal, and new price points for existing phones have positioned Apple for tremendous success during the next quarter, which will be 14 weeks long instead of 13 (due to a quirk in Apple’s fiscal reporting calendar).

Bank of America-Merrill Lynch attributes the glitch to "pent-up demand" and suggests that the iPhone 4S will be a smash hit, writing:

Apple missed revenue and EPS due to an underestimated pause in iPhone sales ahead of the 4S launch. That said, we do not view this as a sign of softening iPhone demand. In our view, solid pent-up demand, combined with incremental unit sales from new carriers added in F1Q12 (Apple deferred the new carrier addition to F1Q12 because of the iPhone 4S launch) should drive a healthy rebound in iPhone sales. We remain buyers of the stock heading into perhaps the most successful product launch in company history, with the iPhone 4S.

Piper Jaffray analyst Gene Munster suggests that some customers are playing the waiting game, hoping to upgrade to an iPhone 5 next summer. But he says a more-bullish-than-usual earnings guidance from Apple for calendar Q4 2011 could point to a blowout quarter. He comments:

We see this as a disappointment, but given the strong start to iPhone 4S sales, we believe it is clear that units were pushed from the Sept. quarter into the Dec. quarter as customers waited for the "iPhone 5"... We believe Apple's Dec-11 quarter guidance is evidence of the company's confidence in iPhone 4S and iPad sales in the Dec-11 quarter.

Morgan Stanley's Katy Huberty was similarly bullish dismissing the miss as a "hiccup". She writes:

We believe the Street underestimated the degree to which September was a transitional quarter for the iPhone but with strong iPhone momentum out of the gate in October, we don’t see the light iPhone shipments as a cause for concern... [L]ower than expected uptick in iPad shipments was the only real "flaw" [in the quarter].

She predicts the company's stock to rise 14 percent within the next year, reaching around $480 USD/share.

II. Some Analysts are Less Cheerful

A few analysts reacted with a bit more pessimism. RBC Capital Markets analyst Mike Abramsky suggested Apple was going through a "transitional" state and suggests "strong catalysts ahead". Yet he suggests that Q4 earnings may miss Apple's guidance, unlike many of his colleagues. He predicts Apple to pull in $34B USD in revenue that quarter, versus the guidance of $37B USD.

Alex Gauna of JMP Securities, suggests that investors shouldn't be so quick to write off Apple's "hiccup". He comments:

Although we anticipate widespread dismissal of the miss as a product transition wrinkle rather than a trend, we view the blow to the company’s sterling track record as significant and caution investors that, 1) Apple remains a high cost/premium vendor in an economically-sensitive environment, 2) Android is growing share more rapidly owing to a lower cost structure and supports more open development, 3) the company has now had a second stumble right out of the box under new management (the first being the iPhone launch), and 4) the company has a high risk vertical approach to many of its products.

We advise not being too quick to dismiss the iPhone miss on product transition issues, as we believe this is going to be a recurring theme for Apple given the limited scope of variety it offers in the handset and tablet categories. We would also have expected this effect to be more muted in overseas markets that are newer adopters of the devices and the majority driver of Apple growth.

Early reads on iPhone 4S sales are truly impressive, but the device is not so dramatic a departure from the prior generation iPhone 4 as to give us confidence that this device can usher back in sales reacceleration. We continue to expect a 4G iPad refresh to arrive before a 4G iPhone in 2012, although little color has emerged regarding what will make them special beyond being 4G.

The implications of an Apple miss means more than is typical, given the importance of its aura of brilliance in sustaining premium price points and product loyalty. This will likely also add to wellplaced investor anxiety around how the company sustains its momentum under new leadership.

Similarly Collin Gillis of BGC Partners rained on the pro-Apple parade issuing a rare downgrade to Apple's stock. He explains:

We no longer suggest being overweight shares of AAPL and see that near-term downside risk overweighs upside reward. Shares have gained 14% since October 7, and increased 31% year-to-date. With the largest market capitalization for a U.S based company at $391 billion, any hiccup in its growth is likely to provide an opportunity to add to positions at a better price.

The company has to constantly set records just to meet expectations. There is nothing wrong with Apple’s business model or execution, but we do see that sentiment is overwhelmingly positive and shares are within 7% of our $450 price target. We believe that it is possible shares pullback below $400, possibly even this week after the earnings report on Tuesday post-market, and we would seek to be buyers at levels below $400. While there is a sea of love in the press for Apple currently, we voice the following notes of caution:

1) Impact of the pending launch of the iPhone 4S on sales in the Sep. quarter. Consensus estimates of 20 million phones sold may prove difficult to exceed given the launch of the 4S phone in the December quarter. While the company did an excellent job at delaying any discussion of a new phone until after the quarter ended, it is worth recalling that this September results have a phone that was at the end of its refresh cycle, not the start of a new one – as has been the case in September quarters in the years past.

2) Education discounts. September quarter margins also run a risk from impact due to education pricing discounts. Cost of revenue last year in the September quarter increased notably from 60.9% to 63.1% sequentially. While this was also driven by the launch of the iPhone4, it is worth mentioning that the September quarter does contain the most impact to margins from educational buying.

3) iPads. Our largest concern is centered around tablets, however. There is limited history of how seasonality and product refresh is going to impact sales of iPads, and consensus estimates of 11.5 million units sold assumes another record shattering. As the iPad is Apple’s second most meaningful revenue stream after the iPhone, if the company does not continue to set mindblowing records (iPads sales account for over 10% of worldwide PC sales just five quarters after launch) it is going to be difficult for the other parts of the business to cover the gap.

Finally, low-cost tablets from competitors willing to lose profit to gain market share are going to incrementally hurt sales of the iPad in our opinion.

Investors reacted in a similar bearish fashion depressing the stock $20 or more in trading today (~4.5-5 percent).

Apple is currently grappling with a leadership transition and preparing the iPhone 5. To launch next summer, the iPhone 5 is rumored to be the last major project Steve Jobs directed. The device is expected to be a major overhaul of the popular smartphone design.

I understand how scared you guys are and how really upset you are by Apple. I used to feel a bit like that back in the 1990s when Microsoft kept getting bigger and Apple looked doomed and I thought for a while the mediocre was destined to rule the world of technology.

Rather startlingly it turned out that it would be Apple and excellence that would rule the world but even before the Apple renaissance began I realised that my disgust with Windows and my love of the Mac OS were blinding me from seeing the world as it really was, it was blocking my ability to really understand how things worked, why Microsoft had won.

So I relaxed (I relaxed even more once it became clear that Apple wasn't dying and thus I would never be forced to only use Windows) and just thought if people want to have a ghastly dysfunctional and ugly computing experience it's pretty much up to them. I can still get a lot of pleasure from just trying to work out how the world works and, amongst lots of interesting questions, think about why Microsoft was so dominant and so much more successful than Apple was.

So when I come across a site like Asymco, run by a clearly very clever and knowledgable guy (he used to be a top executive at Nokia so he know the industry) and see his careful, reasoned and evidenced articles offering an analysis of different aspects of the mobile market I am very pleased. More knowledge is better than less knowledge. His site helps me understand more about the world. I often reference relevant articles here so others can benefit from his work.

Clearly the knowledge, information and analysis that Aysmco offers upsets you guys. Why? Is it because he seeks to understand why Apple has been so successful in the last decade?

I urge you to lose the fear and anger and just try to understand the world as it is. Even if it is sometimes not as you wish. Otherwise you will spend your lives in a froth of disgruntled ignorance. Which is not good.

quote: I understand how scared you guys are and how really upset you are by Apple.

We really don't care dude. What pisses off people is when you become a cheerleader for your favourite company and start chanting their bull. That gets very annoying very fast, it doesn't matter what the company or the product it. We don't want to hear that.

quote: blah blah blah, lots of words without meaning. blah blah blah

See what I mean? This kind of stuff is annoying to read.

quote: I urge you to lose the fear and anger and just try to understand the world as it is. Even if it is sometimes not as you wish. Otherwise you will spend your lives in a froth of disgruntled ignorance. Which is not good.

Oh really, how is the world? It's interesting how a man with such a well seasoned world view will spend his time trolling Dailytech and getting into arguments with anyone who dares say they don't like Apple.

Oh, you're here to raise the veil of ignorance but you don't see your own. Luckily just as you can see when other people are ignorant, so can other people see when you are ignorant. And you have plenty to work on dude. Why don't you do something with your life? Apple won't be around forever dude, what will you do when you can't suck on the penis of Apple? Jobs is dead, so you can't suck his penis anymore and tell everyone about how good it tastes.

"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis